Upgrading outdated grid infrastructure, concerns over an increase in extreme weather events, and government support will help drive the microgrid market, according to a recent report.
Technavio said worldwide microgrid markets will increase at a compound annual growth rate (CAGR) of nearly 14% from 2016-2020.
Updating Grid Infrastructure
North American transformers and transmission lines are a quarter of a century old, while 30% of circuit breakers are 30 years old. These holes in North America’s electrical grid system have been exposed numerous times, including the 2003 North Eastern blackout. This affected various states including, New York, Ohio, and parts of Canada.
Meanwhile, developing areas, including Asia suffer from lack of accessible electricity. Approximately 765 million Asians do not have a reliable connection to the electrical grid. These factors further support future microgrid market development within the next few years, Technavio said.
Extreme Weather Events & Natural Disasters
Technavio firmly believes the increased development for global microgrids will come from the need to provide a resilient grid to battle increased extreme weather events.
These type of events can disrupt power to consumers, from a few hours to a few weeks.
Extreme weather events, ranging from Hurricane Sandy in 2012 to record Texas and Louisiana flooding this year are making a case for supporting decentralized energy systems like microgrids.
“Natural disasters are making a business case for microgrids and are driving their adoption across the world, especially in regions that are frequently affected by natural calamities, such as the southern part of the US,” said Technavio lead analyst Sayani Roy.
“As a large portion of the power can be generated on site, microgrids provide a higher degree of reliability for mission-critical facilities such as military bases, hospitals, and data centers that need to function continuously under any circumstance,” said Sayani.
Some utilities have stepped up to the plate in developing microgrid development. ComEd last year announced a plan to develop a microgrid in Rockford Illinois, which would create 300-400 jobs while reducing the risk of power outages from extreme weather events.
With climate change adding more fuel potentially to extreme weather events, expect more initiatives like ComEd’s microgrid in Rockford to hedge bets against these types of disasters, while spurring more microgrid development.
With outdated infrastructure to meet 21st-century electricity needs and increase in extreme weather/natural disasters, pinpoint the way for more government support of microgrids.
Roy said improvement action from the US government in creating energy efficient power solutions would add underlying support for microgrid growth within the region.
“For instance, the US government provides funding for technologies that help in improving the resiliency of power systems,” Roy said.
Recently, US Senate recently passed this summer a microgrid bill which would further support distributed energy in remote communities, along with those communities often affected by extreme weather events to mitigate further risk.
All three drivers (updating grid infrastructure, extreme weather phenomena/natural disasters, and government support) will be critical in move microgrid markets forward into the future. There is plenty to be excited for within the microgrid industry today.